Home prices may have been on an upward spiral for many years, but the cost of owning a house in India remains near the most affordable level in over three decades, shows data compiled by mortgage giant HDFC Ltd.

The average price of a home, purchased with a housing loan, rose to over Rs 45 lakh in the 2012-13 fiscal marking the fourth consecutive year of uptrend from about Rs 25 lakh in the year 2008-09, HDFC has said in a presentation.

However, factors like an even greater surge in the personal income levels, tax incentives and lower interest rates, have resulted into houses becoming more affordable to purchase, it said.

As per an 'affordability' ratio compiled for over three decades by HDFC, the average cost of owning a house stood at 4.7 times of the annual income of the home buyer in 2012-13.

The affordability ratio, which takes into account the annual income of the home buyer along with the price of the house, stood at as high as 22 in the year 1994-95, but has been mostly on a declining trend since then.

This means that a home buyer, on an average, needed an amount equivalent to nearly 22 times his or her annual income in 1994-95, but an amount less than five times of the annual earnings is required for purchasing a house now.

HDFC has released this dataset as part of an investor presentation on its latest fiscal financial results.

Explaining the improved affordability in the housing market, HDFC said it has been possible because of rising disposable income, tax incentives (on interest and principal

repayments) and affordable interest rates available to the home loan customers.

The lender further said that the mortgage market was also witnessing a high demand growth because of increasing urbanisation and favourable demographics of the country, where 60 per cent of population is below 30 years of age and there is a rapid rise in new households.

Interestingly, the affordability ratio has remained in the range of 4.5-4.7 for the five consecutive years now, although the home prices have nearly doubled in this period.

Excluding a temporary dip during 2008-09, the home prices in the country have been rising for 11 years now, after hitting the lowest level in two decades at below Rs 15 lakh in the year 2001-02. However, the average annual income of a home loan customer has almost tripled during this period from less than Rs four lakh to close to Rs 12 lakh currently.

To be precise, the affordability ratio of 4.7 during the the last fiscal 2012-13 is the fourth lowest ever figure, after after 4.3 in the year 2003-04, 4.5 in 2008-09 and 4.6 in 2011-12.

As per industry experts, the housing loan demand would remain strong as long as the affordability ratio stays in the range of 4.2-5.5 times, while various tax incentives on home loans are making them affordable for the consumers.

HDFC further said that the tax incentives also lower the effective interest rate on mortgages, while the Union Budget 2013-14 has provided an additional one-time benefit of interest deduction up to Rs 1 lakh for first time home buyers, provided the loan amount and property cost does not exceed Rs 25 lakh and Rs 40 lakh, respectively.

As per its presentation, the effective interest rate on home loans currently stands at 5.5 per cent, down from 8.1 per cent in 2002 and 11.6 per cent in the year 2000. The effective rate takes into account tax benefits on principal and interest repayments made by the home loan buyers.

HDFC said that a low housing penetration also implies huge growth potential, because mortgages as a percentage of nominal GDP in India stands very low at 8 per cent. It is lower than the figures for many countries including China, Thailand, Malaysia, South Korea, Taiwan, Hong Kong, Germany, Singapore, USA, UK and Denmark.

Established in 1977, HDFC has financed over 4.4 million housing units on a cumulative basis and its net outstanding loans stood at over Rs 1.7 lakh crore as on March 31, 2013.

It saw its standalone profit after tax rise by 18 per cent to Rs 4,848 crore in the last fiscal, while operating income grew by 22 per cent to Rs 20,797 crore. At consolidated level, the profits rose by 22 per cent to Rs 6,640 crore and total income grew 19 per cent to Rs 35,987 crore.